Ahead of a jury trial scheduled to begin in March, an Ohio investment advisor yesterday changed a not-guilty plea to guilty for her role in a Ponzi scheme in which about $9.3 million was misappropriated from clients, according to a U.S. Attorney’s Office statement.
Tara M. Brunst, of Olmsted Falls, pleaded guilty to conspiracy to commit mail and wire fraud, mail fraud and three counts of wire fraud, the statement said. According to a U.S. Attorney’s Office spokesperson, the maximum possible sentence for each count is 20 years, but Brunst's attorney, Timothy Kucharski, said in an email he expects she will receive "a fair and reasonable sentence." That sentence will be handed down in May.
The cases of two co-defendants, Raymond Erker and Kevin Krantz, are scheduled to go to trial March 22.
According to a grand jury indictment in September 2020, Brunst had been a licensed investment advisor in Ohio since May 2014, and worked for Erker beginning in July 2015. Erker, also a licensed investment advisor, owned several investment and asset management companies, including Sageguard Wealth Management, GenSource Financial Assurance Company and Provident Securities, the court document said, adding that in addition to working at Sageguard, Brunst owned an interest in GenSource.
From January 2013 through July 2018, Erker ran a Ponzi scheme, inducing investors to purchase annuities and senior secured notes in GenSource and Provident when neither company were authorized to issue such investment vehicles, the indictment stated. Instead of going to secure, low-risk investments, money raised from new investors was diverted into Erker’s personal bank account and to pay returns to previous investors.
After Brunst joined Sageguard, she solicited at least 10 people to invest $1.2 million in GenSource and Provident, the indictment said. All in all, the three defendants persuaded 54 individuals to invest $9.367 million in the scheme.
“To avoid detection, members of the conspiracy set up office fronts in Delaware and Nevada, contracted with call centers and created false websites and account statements that purported to show investor account balances,” the U.S. Attorney’s statement said.
The firm’s SEC registration was revoked in October 2019, according to the SEC website.
Before joining Sageguard, according to BrokerCheck, Brunst was terminated after a year at PNC Investments for “creating a letter, at the request of a client, designed to give the false impression that PNC Bank was threatening the client with closure of its accounts if certain events continued to occur, for failure to inform her manager that she had sent the letter, and for being dishonest during the investigation of these events."